Not everyone is comfortable with talking about death. However, it is our reluctance to face the inevitable that is the most significant cause of problems. Some reliefs can reduce inheritance tax significantly, but they invariably need a structure to be in place for at least two years before the replacement can apply, and this period can extend much longer in particular circumstances. Therefore, waiting until we are frail or in poor health before we finally tackle the issue often means it is simply too late to make much of a difference. Planning should start now!
What is an Inheritance Tax planning service?
Inheritance tax planning involves a review of the individual's current exposure to IHT. Fundamental is an understanding of the present value of all the assets, any gifts made by the individual in the last seven years and the individual's residence and domicile status.
They may have formed a view about where they would like certain assets to end up, and whether they have a will in place evidencing decisions already made needs to be understood.
Once the current IHT bill has been established, it is possible to consider ways to mitigate this.
How can Inheritance Tax be reduced?
There are several steps to take, and these include:
- Making full use of available annual exemptions such as the annual gift allowance
- Identifying any assets that can be passed to the next generation by making lifetime gifts known as potentially exempt transfers
- Identifying any reliefs available, such as business property relief
- Considering charitable gifts
A review will also identify other taxes that may be triggered and any reliefs available to mitigate those, such as gift relief for capital gains tax purposes.
Should I use a Trust for Inheritance Tax Planning?
You may wish to use a trust as a structure to protect assets and pass them to the next generation. We can advise on the tax consequences of trusts, although we cannot draft trust documentation and will need to work alongside your solicitor concerning this step once the planning exercise is advanced.
Top-Notch Accountants can help you plan
If you would like to meet with us to discuss your Inheritance Tax planning requirements, please call 0179 542 0822 or use our simple online enquiry form to book a free initial consultation.
